Twin Cities pending home sales fell steeply in May, according to new data from the Minneapolis Area Association of Realtors. The drop was expected after the expiration of the federal home buyer tax credit.
Signed purchase agreement for pending home sales plummeted in May by nearly 25% compared to May of last year. There were 3,910 signed agreements last month, compared to 5,183 signed purchase agreements in May 2009.
Closed sales are up, but that’s because buyers who signed purchase agreements in time to qualify for the tax credits must close on the sale by June 30 in order to qualify for the $8,000 federal first time home buyer tax credit.
The Twin Cities median home price last month was $175,000. That is a 6.1% increase compared to last May. That was the fifth consecutive month of year over year gains. However, the slowing of pending sales and demand could continue, which may bring that price down.
On the other hand, potential Twin Cities home buyers should realize that interest rates are still at historic lows. And real estate prices are still down significantly compared to the top of the bubble, meaning there are some great housing deals out there.
Additionally, though the summer selling season might have slowed, 2010 is shaping up to be the best year since 2007 for homebuilders in the Twin Cities. During the first five months of the year, builders received 1,249 permits for 2,159 residential housing units in the Twin Cities metro area, according to numbers released at the end of May by the Builders Association of the Twin Cities.
Maple Grove issues 30 permits in May, Shakopee issues 26, and Blaine was next with 22 permits. Rounding out the top five communities were Prior Lake with 18 and Lakeville and Hudson, Wis. tied with 16 each.
Now is a good time for people who want to custom-built homes like the ones constructed by Norton Custom Homes. Construction costs currently are about 15% lower than two years ago. Again, interest rates are at historic lows. Need more incentives to build this year? There are various tax credits for “green” construction projects which could be included with your new home’s plans.